Why Russia will “get” money out of the pockets of the population, weakening the ruble

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The Ministry of Finance expects gradual weakening of the Russian ruble for the next 17 years. This is stated in the document “Budget forecast of the Russian Federation to 2036”. It is noted that the average benchmark rate is 73.9 rubles per dollar, with the stabilization of oil prices in the range of $40-50 per barrel in the observation period. In the period of 2021-2025, the dollar may cost 66,4 RUB on a piece 2026-2030 years – 71,1 RUB, next, is of the order of 73,9 RUB.
Expectations based on estimates of the profitability of commodity production and comparative analysis of production in Russia, the middle East, USA and Canada. According to the Finance Ministry in the coming years, there is no apparent justification for maintaining oil prices at a high value.
On the one hand, long-term forecasts are usually more objective: they are based on the global observations and the parameters is cleared from the effects of volatility and emotions, and therefore more objective. On the other for Russia to make such a prediction special is not working because its economy is an economy that is resource based and relies on the revenues from the sale of energy. The dependence of the state budget revenue from oil and gas is 55-60%, the authorities warn about a constant decrease in this regard, but long term projections show that this is not so.
While expensive oil, Russia can ensure adherence to the inertial scenario of development, “tobira” 1.5% -2% GDP growth per year. However, in periods when the barrel is cheaper, the implementation of this approach difficult, and the authorities apply the mechanism of weakening of the ruble is actually a controlled devaluation.
It turns out that in the next 17 years the General outline of the Russian economy will not change fundamentally, and a strong ruble in the long period of waiting does not make sense at differences in income, Russia will “get” money out of the pockets of the population, weakening the ruble.
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Anna Bodrova,
Senior analyst,
Alpari